Renewables Fail the Cost Test, Again

The Federal Energy Regulatory Commission (FERC) has just released theirEnergy Infrastructure Update report, which shows how much new electric generating capacity was installed for 2012. According to the report, renewable energy sources (biomass, geothermal, solar, hydro, and wind) accounted for 49.10% of all new domestic electrical generating capacity installed in 2012 for a total of 12,956 MW. More than a quarter of that new capacity (25.29%, or 3,276 MW) reportedly came on-line in the month of December 2012 alone and wind led the way in 2012 with 164 new “units” totaling 10,689 MW.

Advocates of renewable energy are likely cheering these new numbers—even though, according to the FERC report, renewables still only account for 15.40% of total installed U.S. operating generating capacity, with wind coming in at 4.97%. (Note: wind megawatts are not comparable to other megawatts, as they’re not always available.)

Without directly saying so, the FERC report highlights renewable energy’s dependence on government subsidies. Why in a twelve-month year, did more than a quarter of the new capacity come online in just one month—the month of December?

Despite intensive lobbying efforts on behalf of the American Wind Energy Association, the Production Tax Credit (PTC) for wind energy—that was set to expire at the end of 2012—wasn’t extended until the Fiscal Cliff Deal became law on January 2, 2013. Those seeking to benefit from the government largesse had the financial motivation to get as many wind projects as possible up and running. As long as the project was completed in 2012, it would receive the PTC for the next ten years. The Fiscal Cliff Deal gave wind energy developers one more year to take advantage of the PTC—but the PTC extension wasn’t a sure thing until after it had already expired. (Note: the new PTC deal changed the requirements from being completed by the end of the one year extension to qualify, to merely starting construction by December 31, 2013.)

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